The Chapter 7 Bankruptcy Timeline in NYC

What are the steps, what is the process, and how long does a Chapter 7 bankruptcy take?  Most Chapter 7 bankruptcies in New York City are completed relatively quickly, and are discharged within 3-6 months of the filing date.  Every case is different and a good bankruptcy attorney will know how your specific case will unfold, but all Chapter 7 cases have important dates, deadlines and restrictions to be aware of.

First, go back eight years.  If you filed for a Chapter 7 in the past eight years and had a successful discharge you will be ineligible to file for Chapter 7 again until eight years from your previous filing date.

If you are eligible for Chapter 7 bankruptcy protection based on your past bankruptcy history then start thinking back to one year ago.  If you had a Chapter 7 case dismissed within the last year, you will need to show you have entered the new Chapter 7 in good faith within 30 days of filing or the “automatic stay” that keeps your creditors at bay may be lifted.  Also, if in the past year you have tried to do anything tricky to hide your assets from your creditors or transfer your money to a third party the bankruptcy court in New York will likely deny your Chapter 7 case.  Not only will you be denied relief in this case, but the money you have given to a family member or business associate may also be taken and distributed to your creditors as well.

So if you haven’t previously filed for Chapter 7 in the last year and been denied, and you haven’t done anything to transfer assets prior to filing then look back now to six months ago.  If you recently filed for bankruptcy but had that case dismissed in the last six months then you must wait six months to file for Chapter 7 again.

Now let’s look back to three months ago.  You must have resided in New York State for at least ninety days to be eligible for filing Chapter 7 in the state.  Also, if you have paid back any of your creditors in the past three months payment may be considered a preference.  The bankruptcy court will see this payment as being special treatment to one creditor over another. The court may reclaim the funds and distribute them to your other creditors.  Finally, if within three months you have racked up a new credit card for over $600 for “Luxury Goods”, or if you have made cash advances over $875 in the last 70 days then these debts will not be discharged in your Chapter 7.  The court will hold a presumption of false pretense, i.e. you had no intention of repaying the debt.  “Consumer Bankruptcy Law and Practice” Volume 1 sec. defines luxury goods and services as those, “that are not reasonably necessary for the support or maintenance of the debtor or the debtor’s dependants.”  Necessary household essentials, clothing, appliances etc are not considered luxury items.

If you are in compliance with the above, and most clients are to this point, then you are ready to file your Chapter 7 case.

Your attorney will formally file your bankruptcy petition with the New York Bankruptcy Court.  As soon as it is filed the court will issue an “automatic stay” that will prevent your creditors from taking any further collection actions against you.  The threatening phone calls and letters will stop, and the creditors will not be able to contact you for the duration of your case.  The court then assigns a bankruptcy trustee to your case to review the petition, make sure you are eligible, and schedule a meeting of your creditors.  The court will also notify your creditors by mail and/or electronically that you filed.

At this time your attorney will most likely file the financial “schedules” listing your assets, income, expenses and debts along with a statement regarding your state of financial distress.  This paperwork is due within 15 days of filing but your attorney should be ready to go and will typically file this with the bankruptcy petition.

 Within about two weeks of your Chapter 7 filing you and your creditors will receive a letter with the date for the “Meeting of Your Creditors”.  This letter will also give a deadline for your creditors to object to your case and to make their claims against you.

About three to six weeks after you file your petition the court will hold the “Meeting of Your Creditors”.  You will need to attend this meeting, but you will testify only to the accuracy and truthfulness of your petition.  Your attorney will provide the trustee and your creditors a copy of your most recent tax return for this meeting.   A trustee will examine you under oath but no judges are allowed at the meeting.  The meeting is very informal, not like a trial, and creditors almost never come.  It usually takes approximately 5 minutes.

After the meeting, your creditors and the bankruptcy trustee will have one month to make any objections to the bankruptcy exemptions you are claiming.  Your creditors have two months from the time of the meeting to object on the grounds of misconduct to the discharge of any of the debts listed in your petition.

The trustee must now, within 60 days after the meeting of your creditors, either object to  your case or abandon your assets and close the meeting of creditors.  This just means the trustee is finished investigating you and has no issues with your case.

Upon receiving the Chapter 7 discharge you will no longer be buried under unmanageable debt and toxic credit card bills.  You will be entirely forgiven for the debt owed to your creditors and you will have a chance at a fresh financial start while keeping your home, vehicle and your possessions.

If you live in New York City and have questions about Chapter 7 bankruptcy relief and how it can improve your life, please give the law offices of William Waldner a call at 212-244-2882 for a free bankruptcy consultation today.  We have a 100% Chapter 7 discharge record as of 8/28/2013.  Our clients are routinely surprised at what they are able to gain, not lose in their bankruptcies.

This article is intended for educational purposes only. By reading this article no attorney-client relationship has been created.